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Energy Recovery Leader, China Energy Recovery
Reports Record First Half Fiscal 2008 Financial Results with Revenue
Increase of More Than 170%
Aug 20, 2008
China Energy Recovery, Inc. (OTCBB:CGYV) ("China Energy Recovery" or
"CER"), a leader in the waste-heat recovery sector of the
alternative energy industry, today provided commentary on the
company's first half-year results recently released. Revenue in the
first half of 2008 increased to $9.9 million, up from $3.6 million
in the corresponding period in 2007, an increase of 171.5%. The
increase the company experienced is due to increased sales volume of
energy recovery systems and services of the company as a result of
accelerating market demand.
Gross profit reached $1.9 million, representing a 19.3% gross
margin, for the six months ended June 30, 2008, compared with gross
profit of $0.5 million, or a 15.2% gross margin, for the same period
in 2007. The increase in gross profit is mainly attributable to
increased licensing and design service revenue with higher margins
and the company's efforts in adjusting contract prices in coping
with higher volume orders and the increased prices of raw materials.
Selling, general and administrative expenses were $1.1 million for
the first half of 2008, or 11.0% of sales revenue, as compared to
$0.6 million, or 17.4%, for the same period in 2007. Aside from the
one time extraordinary expenses related to the company's recent
reverse merger and associated $8.5 million financing, operating
expenses remained relevantly steady while substantial revenue growth
was achieved during the first six months of 2008.
Net income for the company increased to $0.6 million for the six
months ended June 30, 2008 as compared to a net loss of $0.1 million
for the same period in 2007. The increase in net income is mainly
attributable to increased sales volume of the company's products and
services and improved operational efficiency.
"We have been orchestrating a growth strategy for China Energy
Recovery designed to increase capacity in order to maximize our
ability to more efficiently service our customers, and that strategy
is paying off," stated China Energy Recovery CEO, Mr. Qinghuan Wu.
"We raised money in Q2 that we needed to enhance our working capital
position allowing us to build new products at an accelerated rate.
As a result, growth for our company is increasing at a significant
rate and our backlog orders are higher than in any period in the
company's history."
In April of 2008, the company announced the closing of an $8.5
million (USD) financing, consisting of an offering of convertible
preferred stock and warrants. The company expects to use the
proceeds to finance working capital and ramp production to meet
existing and future orders.
"We primarily relied on our previous efforts in achieving record
sales growth for the first half of 2008. Customers find us based on
our reputation in the market of being able to deliver products
customized to fit their needs. The financing we brought in during
the second quarter of 2008 has better prepared us for an expected
surge in production and we expect that it will help us improve
profitability in the second half of this year," continued Wu. "Our
projections for the latter half of 2008 are of continued record
growth and we expect our current growth rate to continue well beyond
that."
What is Energy Recovery?
Industrial facilities and power plants release significant amounts
of excess heat into the atmosphere in the form of hot exhaust gases
or high pressure steam. Energy recovery is the process of recovering
vast amounts of that wasted energy and converting it into usable
electricity, dramatically lowering energy costs. Energy recovery
systems are also capable of capturing the majority of carbon
emissions and other harmful pollutants that would otherwise be
released into the environment. It is estimated that energy recovery
systems installed in U.S. industrial facilities could produce up to
20% of U.S. electricity needs without burning any additional fossil
fuel, and could help many industries to meet stringent environmental
regulations.
About China Energy Recovery, Inc.
CER is an international leader in energy recovery systems, with a
primary focus on the Chinese market. CER's technology captures
industrial waste energy to produce low-cost electrical power,
enabling industrial manufacturers to reduce their energy costs,
shrink their emissions footprint, and generate sellable emissions
credits. CER has deployed its systems throughout China and in such
international markets as: Egypt, Turkey, Korea, Vietnam and
Malaysia. CER focuses on numerous industries in which a rapid
payback on invested capital is achieved by its customers, including:
chemical, petro-chemicals, refining (including Ethanol refining),
coke processing, and the manufacture of paper, cement and steel. CER
continues to invest in R&D and plans to build China's first
state-of-the-art energy recovery system research and fabrication
facility to allow it to meet the increased demand for its products
and services. For more information on CER, please visit:
http://www.chinaenergyrecovery.com/s/Home.asp.
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